Australian supermarket chain Woolworths Group has announced it will close 30 under performing Big W stores over the next three years amid the waning retail environment.

The company made the decision following a strategic review of the Big W, in order to help the company maintain a strong and profitable store network.

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The 30 stores represent approximately 16% of all Big W stores. On average, these stores have a remaining lease tenure of approximately 10 years.

Woolworths expects the closures to cost approximately AUS$270, which will mostly be related to the lease exit costs and other redundancy payments.

The Australian supermarket chain will also close two distribution centres (DCs) at the end of their leases in Monarto, South Australia and Warwick, Queensland in the financial year 2021 and 2023, respectively.

Woolworths Group CEO Brad Banducci said: “As foreshadowed at our half year 2019 results, while the recovery in trading for BIG W is encouraging and there remains further opportunity for improvement, the speed of conversion to earnings improvement is taking longer than planned.

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“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment.”

“We understand the impact that the store and DC closures will have on our team and will endeavour to provide affected team members with alternative employment options within the Woolworths Group where possible.

“This decision will lead to a more robust and sustainable store and DC network that better reflects the rapidly changing retail environment. It will accelerate our turnaround plan through a more profitable store network, simplifying current business processes, improving stock flow and lowering inventory.”

The company is currently in negotiations with landlords of affected stores.

Big W is expected to have a pre-tax loss of AUS$80m to AUS$100m this financial year, despite its sales rise of over 6% in the third quarter (Q3).